ATO late lodgement penalty: up to $364 per 28 days, capped at $1,820 per document · interest 11.43% p.a. compounding daily · See how to remit them →
Nothing makes a tax backlog feel urgent quite like a finance application. You have found the property, the broker has asked for documents, and the list includes something you cannot produce because the return behind it was never lodged.
This is one of the most common reasons people finally deal with overdue tax returns, and it is also one of the most fixable. The documents lenders want are generated by lodgement. Lodge the years, and the documents follow.
What lenders commonly ask for
For salary and wage applicants, lenders commonly ask for the last one or two years of notices of assessment. A notice of assessment is the ATO's confirmation of what was assessed for an income year, which is exactly why lenders like it: it is independent verification of income, not something an applicant produced themselves.
Self-employed applicants are asked for lodged returns and financials. Same logic, more documents. A lender assessing a sole trader or a company director wants to see the lodged position, not an estimate of how the business is going.
Why unlodged years stall the application
An unlodged year does not just look untidy on a file. It means the notice of assessment for that year does not exist, so there is nothing to send. The application sits in limbo while everyone waits for a document that cannot arrive until the return is lodged and processed.
That is genuinely the whole problem, and it is worth saying plainly because people often assume something more damaging is going on. The blocker is a missing document, not a verdict on you.
How to fix it fast
Clearing the blocker
Confirm which years the lender needs
Usually the last one or two years for salary applicants, and lodged returns plus financials if you are self-employed. Ask your broker to confirm before you start.
Establish what is actually outstanding
A registered tax agent can see your full lodgement position with the ATO in minutes, so nothing is missed and nothing unnecessary gets prepared.
Lodge the outstanding years
Catch-up lodgements can often be completed within weeks. Straightforward catch-ups are typically prepared and lodged within around five business days of records being received.
Wait for the notices of assessment
The ATO issues notices of assessment after processing. Those are the documents your lender has been waiting for.
If the missing years are sole trader years, overdue sole trader returns is the relevant service page, and how long a late return takes sets out realistic timing so you can give your broker an honest answer.
Working with your broker
Good brokers deal with this constantly and are rarely fazed by it. What they need from you is a realistic timeframe, not reassurance - so telling them "the outstanding years are with a registered tax agent and lodgement is underway" is far more useful than going quiet.
We work with mortgage brokers whose clients need lodgements cleared before an application can proceed. If you are a broker with a client stuck on this, the mortgage broker referral page sets out how that works.
Common situations we see
- A salary earner who has two years outstanding and needs notices of assessment for both before a pre-approval will progress.
- A sole trader who has been trading well for years but has not lodged, so there are no lodged returns or financials for a lender to assess.
- A couple where one applicant is up to date and the other has a backlog holding up the joint application.
- A borrower refinancing who has discovered mid-application that a year they assumed was lodged never was.
In all of them the sequence is the same: find out what is outstanding, lodge it, wait for the notices of assessment, send them on. No judgment about the delay, and no need to explain yourself to us.
Frequently asked questions
Can I get a home loan with overdue tax returns?
How quickly can the outstanding years be lodged?
What do self-employed applicants need?
Where do notices of assessment come from?
TaxNudge is a registered tax agent specialising in overdue tax returns, late BAS and ATO debt for individuals and small businesses. Fixed fees, zero judgment.
General information only - not personal tax, financial or legal advice. Consider your own circumstances or speak to a registered tax agent. Remission of penalties or interest and payment plans are decisions of the ATO and outcomes can't be guaranteed.